In this photo provided by the New York Stock Exchange, trader Colby Nelson works on the floor, Friday, Jan.
In an orderly but persistent plunge, nearly all sectors of the stock market sold off.
The biggest drive of the plunge was growing concerns that persistently high inflation will force the Federal Reserve, the U.S.
The decline was a wake-up call for investors, who had seen prices collapse when the pandemic started in March 2020.
Some analysts said the sell-off was an inevitable response to months of rapid growth.
“This is a normal correction in a bull market,” said Ivan Feinseth, an analyst at Tigress Financial.
Still, a tough stock market could add to a litany of economic pains Americans have experienced recently, despite the strong overall economy.
Most notably, mortgage rates are zooming higher, suggesting that historically pricey housing will only get more expensive for buyers.
The hope is that by slowing lending, Americans’ seemingly insatiable demand for goods and services will ease, and price growth will cool.
It remains a tricky balance for the Fed, led by Chair Jerome Powell, who Biden has nominated for a second term.
If the Fed is too aggressive, it could send the economy crashing into recession and cause unemployment to soar and economic misery to spread.
The fallout of the week’s losses could have broad consequences, striking 401 and retirement accounts and causing borrowers to peel back expectations for the year after a prodigious rise in the market over the past year.
American consumers, bolstered by a booming stock market and high savings rates, have so far continued to spend despite rising prices and disruptions from the fast-spreading omicron variant.
Bitcoin, the largest cryptocurrency, lost 10% of its value on Friday as it fell to less than $37,000, its lowest level since August.